A: Funding portals offering securities of issuers under the Equity Crowdfunding Start-up Exemption may be operated by either:
funding portals operated by persons relying on the start-up registration exemption;
funding portals operated by restricted dealers under the Integrated Crowdfunding Exemption;
funding portals operated by registered dealers
A funding portal intending to rely on the start-up registration exemption must deliver certain forms to regulators at least 30 days before starting operations. These forms are:
Form 3 Start-up Crowdfunding Funding Portal Information Form (8 page PDF Form);
Form 4 - Start-up Crowdfunding – Funding Portal Individual Information Form for each promoter, director, officer and control person of the owner of the portal (8 page PDF Form).
other documents regulators may request
Documents that may be requested include:
Organizing documents of the funding portal (articles and certificate of incorporation or partnership agreement);
Business registration numbers and documents that support the funding portal’s process;
Procedure for handling of funds and meeting other conditions of the start-up
Portals who are licensed to operate under the Start-up Crowdfunding Exemption are not subject to the “know your client” and “client suitability” rules imposed on registered dealers. They are however subject to certain other requirements such as:
The head office of the portal is in Canada;
A majority of the portal’s directors are Canadian residents;
The portal is not registered under Canadian securities legislation;
The portal cannot be related to businesses making offerings through them;
The portal must ensure that both the issuer and the investor have an address in a participating jurisdiction;
The portal must not allow an investment until the investor acknowledges that they are accessing the website of a funding portal which is not registered under Canadian securities legislation and which provides no advice about the suitability or the merits of the investment, and the investor acknowledges that they have read and understood the offering document and risk warning made available on the funding portal;
The portal must not provide advice to potential investors;
Funds received for an offering through the portal must be held separate from the funding portal's property, in trust for the investors until the close or abandonment of the offering;
The portal must not release funds to the issuer until the minimum amount to close the offering has been reached; and
The portal must provide the issuer with each investor's name, address, telephone number, email address and the details of the purchase within 15 days of closing the offering.
Portals may receive a fee or a commission based on the amount raised for their services.